Opinion: The S&P Shakedown

This transcript has been automatically generated and may not be 100% accurate.

... China on another kind of publicity stunt ... this one from the Justice Department ... have a listen ... he allegedly continued to read hundreds of billions of dollars forests CDO's backed ... by RMBS collateral ... ignoring their own analysts performance projections showing that the ratings ... on the collateral ... would not hold ... the action that we announced today ... marks in importance to fourth in the administration's ongoing efforts to investigate ... as well as to punish the conduct that is believed to contribute to the worst economic crisis ... in recent history ... welcome back to Opinion Journal why Mary Kissel that was Attorney General Eric holder ... announced and governing case against Standard in porous ... for its ratings on complex mortgage securities at the height of the financial crisis ... assistant editorial page editor James Freeman is here James ... that the crisis was ... many years ago what took so long ... yeah that's a good question that many of you look at this complaint ... there were I think it was of was seven possibly only the Securities and Exchange Commission a ... came out with a lot about damaging e mails from other ... people within the rating agencies are basically saying that they didn't think the process was good that the ... they were chasing market share instead of focusing on more time on the putting out a good rating but that ... really what the day amazing thing about this and just talk about all ... you have this one part of the government ... sewing the rating agencies for fraud while another part of the government the Securities and Exchange Commission ... to this day has still not removed their endorsements the same the ages ... of their roles ... and then it's what's amazing about this complete is the Justice Department even goes to explaining why these rating agencies have so much power wide investors pay attention to them one of the fall of this terrible advice is because the government the LAZ folder entity will get the feeling he think that they ... possibly should have named the Securities and Exchange Commission as another defendant in this or possibly an un indicted co conspirator because ... they created a system that means the institutions follow the rate it a chance that Moody's and Fitch want maintenance in either what a ... while ... that's a good question because this is this the they're essentially the same businesses they've had their share of bulk ... of embarrassing e mails come out since the financial crisis they certainly ... issued their share of terrible ratings on mortgage backed securities ... it is a question that when you when you think about the ... standard imports in ... twenty eleven ... issue that downgraded the U S credit rating and you need to think that this is some kind of payback but I think this question of why just SNP is on people's minds or is it well it is I think we can safely connect the dots and agents say there may be a linkage but maybe like it's their chance to step back though ... first it was time to shake downs of the bank's ten shake downs of the mortgage lenders ... the shake down to the credit card companies ... to was the part ... of this ... economy turns the financial industry and government isn't and so I think that's the reason for the skepticism is that the timing and ... the fact that they still haven't reform the system that gave SNP all this power ... it does make you think this is a political exercise and it's of this ... this demand on the left too wide to find more villains ... to Opana shed this is not in any way meant to be ... on our part in defense of the ratings agencies we've written ... over and over and over again how you've gotta get the government endorsement ... of their you've got a ... whole lot of these things to be simply just another opinion in the market ... but as far as this approach via the prosecution of a company ... without reforming the system that scraping all these problems it just it's really all ... about reforming the system briefly in the free market system ... the company was selling you bad products to just go buy a better product or another company in a bad company wiggle out of this that that well yet you keep hoping that that the obvious remedy finally gets done the the the twenty ten Dodd Frank financial law actually what one of the few good parts of the consent of the government ... stop endorsing these ratings agencies take the references to them out new rules ... for them for the most important roles the SCC still has not done that and here we are ... soon a half years later ... not a part of the government the mass selling these agencies so I I hope that ... you know might be one result of this so ultimately change the government is shaking out financial institutions taking the money in in re distributing it back out ... she is that that that I'm the thing I did this ... you know you have to question dollar ... lawsuit is happening now and and what the end result is only a set of hoping we at least get some policy benefit the shines light on the fact that the government has not performed this terrible system that they paraded ... as we called the triumph of hope over experience assistant editorial page editor James Freeman ... thanks for being with us ...